Rail sweeteners will not worry Brussels

If Clare Short, Labour's new transport front-bencher, expects help in the fight against rail privatisation from her former colleague, Neil Kinnock, she will almost certainly be disappointed. To believe the headlines, Mr Kinnock could prove a big stumbling-block. The truth, however, is that the Brussels transport commissioner has already put the issue in a file marked boring and routine. Colleagues make clear he is showing no signs of turning it into a cause celebre l ike his battle with the Spanish government over the rescue of the airline Iberia.

The idea that subsidies for a privatised railway are different from the money already funnelled in huge quantities to the existing state-owned companies is plain daft in a Europe where unsubsidised railways are as common as unicorns. Approval from Brussels is necessary, because the subsidies will be going to private firms and will almost certainly rise for the first year or two. But it is hard to see approval being long delayed.

A rather subtler point Mr Kinnock must deal with is whether new guarantees given to the three-rolling stock leasing companies, after they are privatised, will amount to state aid, and if so whether the guarantees distort the transport market. The issue arises because the potential new owners of the Roscos, for which bids thought to be worth pounds 1.7bn-pounds 1.8bn are on the table, have been offered two sweeteners.

The first is a contractual commitment by the Government to pay part of the cost - but less than 100 per cent - of modifying existing rolling stock if the safety authorities demand improvements. Here again, it is hard to see why Brussels would need to interfere. Since the Government already owns the Tocs and is responsible for the entire safety bill the new arrangements simply switch some of the existing risk onto the private sector. The potential cost to the state will as a consequence fall.

The second sweetener is a guarantee from the Government that in the event of insolvency among the Roscos' customers, the state will pay up to 80 per cent of the lost rental income on the rolling stock. The rationale for this is that is that since the Roscoswill be sold next month before the train operating franchises have been let, their new owners can know nothing of the financial viability of new private sector customers and need protection as a consequence.

Neither sweetener appears to increase the financial risk to taxpayers after privatisation, and it is even harder to see how they could distort the transport market. There is plenty wrong with rail privatisation, but Labour is barking up the wrong tree on this one.

Arts and Entertainment
Rita Ora will replace Kylie Minogue as a judge on The Voice 2015
Life and Style
Life and Style
Alan Turing, who was convicted of gross indecency in 1952, was granted a royal pardon last year
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Life and Style
Arts and Entertainment
Tennis player Andy Murray's mum Judy has been paired with Anton du Beke for Strictly Come Dancing. 'I'm absolutely delighted,' she said.
tvJudy Murray 'struggling' to let Anton Du Beke take control on Strictly
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits